I’ve had a couple people ask me for an update on The Corn House, and I realized that it’s been a while since I’ve even mentioned it…
My last update was in May, at which point the lease-purchase tenants were making progress on their credit and we were pursuing both FHA and NACA financing for them. Unfortunately, because NACA is so backlogged, their appointment was pushed back several times, and ultimately, we’ve decided to pretty much give up on that route. But, we pulled their credit again a couple weeks ago, and things are continuing to improve.
When we first met with these tenants in 2009, their high credit score among the three reporting companies was around 540 (with the other two bureaus not having any score at all). Now their high score is up to 640 and their other two scores are in the upper-500s. Because their main issue was lack of credit, in addition to the credit score improvement, the tenants got their first (secured) credit card earlier this year, and are working on two more. FHA wants to see at least three open lines of credit these days (with on-time payments), so getting these additional two cards will help them tremendously towards getting their financing.
My broker is convinced that if they keep on this path, they will qualify for FHA financing in the next 12 months, and potentially in the next 6 months. This is a long departure from the planning Fall 2009 closing we were hoping for last year, but the tenants continue to pay their rent on time every month and now have $8000 built up in escrow towards their downpayment and closing costs.